Prime Minister Narendra Modi chaired a crucial meeting on Monday to review and finalise India's strategy for the Regional Comprehensive Economic Partnership (RCEP) agreement, a source told FE, amid growing expectations that India would endorse the mega trade pact without delay, shedding initial inhibitions. It comes just days before a scheduled meeting of trade ministers of the 16-nation RCEP grouping in Bangkok during October 10-12, in what could be the last ministerial meeting before a potential deal is sealed in November.
Commerce and industry minister Piyush Goyal is learnt to have briefed the Prime Minister on Monday about India's offers and stance at the RCEP negotiations, along with negotiating positions of other countries. Modi had convened a series of meetings on RCEP in recent months, said the source. Home minister Amit Shah, finance minister Nirmala Sitharaman and external affairs minister S Jaishankar have been part of the deliberations, apart from Goyal, the source added.
Technical negotiations for the RCEP deal were over when chief negotiators of various countries met in Vietnam recently, after 28 rounds of talks. Goyal will represent India at the Bangkok ministerial meeting.
Having shown reluctance earlier due to fears of dumping by China, India may agree to trim or remove tariffs on Chinese goods in five phases over a period of 20-25 years to protect its industry. Similarly, India's tariff concessions would be the least ambitious for China - it plans to reduce or abolish import duties on a total of 80% of imports from China, 86% from New Zealand and Australia, and 90% from Asean, Japan and South Korea, sources had told FE recently. India may also seek a similarly long time-frame for phasing out tariffs for New Zealand and Australia. Of the 16-nation grouping, India currently doesn't have any free trade agreement (FTA) with only China, Australia and New Zealand, although the RCEP will be far more ambitious than any of its existing FTAs with Asean, Japan and South Korea.
Last month, RCEP trade ministers pledged to address contentious issues and clinch a deal this year, stressing that continuing uncertainties in trade and investment environment had dampened growth outlook across the world. Without explicitly mentioning the escalating trade war between the US and China, they said trade uncertainties would likely impact businesses and jobs, 'adding to the urgency and imperative of concluding the RCEP'.
Trade analysts and economists have highlighted the importance of India joining the RCEP to better integrate with the global value chain and improve its trade competitiveness. But several domestic industries - including steel and pharma - have strongly resisted any such deal, on fears that cheap Chinese products, diverted from the US due to the ongoing trade war, will flood our markets. The dairy industry are opposing any such deal with New Zealand, a major dairy producer and exporter.